When MasterCard Inc. paid a team of lobbyists about $70,000 earlier this year to promote the bank-card network’s views, a new topic made their list: bitcoin.
Washington-based Peck Madigan Jones had five of its lobbyists, including Jeff Peck, who leads the firm’s financial services and capital markets practice, work on subjects including “bitcoin and mobile payments” in the House of Representatives and Senate during the first quarter, according to a regulatory filing. Other topics the firm handled for MasterCard included data breaches, interchange fees and gift cards.
As big financial companies dismiss bitcoin’s prospects, the document shows MasterCard is at least talking with lawmakers about the virtual currency, which entrepreneurs pitch as a cheap alternative to established payment systems. Investors in bitcoin businesses are working to head off burdensome regulation and capture some of the combined $61.3 billion in annual revenue generated by the four largest U.S. credit-card networks.
“We were gathering information in connection with recent congressional hearings to better understand the policy issues around virtual and anonymous currencies,” said Jim Issokson, a spokesman for Purchase, New York-based MasterCard.
Peck Madigan Jones lobbies for financial-industry clients including Deutsche Bank AG and Wells Fargo & Co. Lobbyists working for Visa Inc. and American Express Co. didn’t mention bitcoin in their quarterly filings.
“It is safe to assume that an incumbent payment-network provider would want to make sure bitcoin-based payment businesses are subject to the same level of regulatory scrutiny as the incumbent networks and their member banks,” said Gil Luria, managing director of equity research at Wedbush Securities Inc.
Paul Cohen, a spokesman for Foster City, California-based Visa, and Marina Norville at New York-based AmEx declined to comment.
The about $70,000 paid to Peck Madigan Jones is dwarfed by the $4.1 million MasterCard and affiliates spent on lobbying last year, according to data from the Center for Responsive Politics.
Regulators worldwide are starting to impose rules on digital currencies such as bitcoin, and federal and state officials are set to provide more guidance in coming months. Bankers including JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon have predicted bitcoin probably won’t last after governments subject it to rules and standards akin to those for other payment systems.
“You can already see there are some issues about it -- just on some very basic things,” MasterCard Chief Financial Officer Martina Hund-Mejean said in a January interview. “When you talk about virtual currencies you especially compare it to what we do in our network, and the safety and the security around it is paramount.”
Bitcoin “will be unable in its current state to establish the network or brand identity necessary to compete with Visa and MasterCard,” Morningstar said in an April 9 report.
Visa, the world’s biggest bank-card network, has 2,500 times more users than bitcoin, is accepted by at least 250 times the number of merchants, and spent $4.5 billion on brand awareness in the past five years, the analysts wrote.